ALBAWABA - In response to the sharp depreciation of its domestic currency following the incursion by Hamas militants over the weekend, the Bank of Israel has unveiled a significant initiative. The central bank disclosed on Monday its plan to sell up to $30 billion in foreign reserves as part of an effort to support the Israeli shekel.
the central bank emphasized its commitment to intervening in the market in the near term to mitigate the fluctuations in the shekel's exchange rate and to ensure the essential liquidity required for the proper functioning of financial markets.
The Israeli shekel recently experienced a 1.63% depreciation against the US dollar, reaching a seven-year low at 3.90.
In addition to the $30 billion program, the central bank also announced its intention to provide market liquidity through swap mechanisms, injecting up to $15 billion.
The statement concluded with the assurance that the Bank of Israel will continue to closely monitor market developments and deploy its available tools as needed.
On Sunday, Israel's benchmark TA-35 index recorded a 6.47% decline, marking its most significant loss in over three years, dating back to March 2020.
Zvi Eckstein, former deputy governor at the Bank of Israel, expressed confidence in the resilience of the Israeli economy, noting, "Unless there is a physical Iranian attack, it is very likely that Israel will return to full economic functionality within a week or two." He also acknowledged that the Israeli currency might experience some devaluation as both domestic and foreign investors reduce their exposure due to increased economic risk.
The recent incursion occurred on a major Jewish holiday when the Palestinian militant group Hamas launched a multifaceted infiltration into Israel via land, sea, and air, including the use of paragliders. This attack followed a barrage of thousands of rockets fired from Gaza into Israel.
